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A Contrarian’s Dilemma from Tocqueville Asset Management L.P.
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"Not to be outdone, the central bank of India surprised the market"
Condensed: He still likes gold but this pullback sucks.
+100
Mules always make things short and sweet.
BAD KITTY!!
http://www.blackbearheaven.com/horse-kills-cougar.htm
Would you rather buy gold at $1,220 or $1,130? I sold some of my gold to the price chasers near $1,200. Now I'm buying some back $70 cheaper.
For everyone to read it:
http://www.rickackerman.com/wp-content/uploads/2009/12/Dubai-Wipeout.htm
hi guys,
my name is stewart dollery and im an ex employee of wallstreet underground run by SCUMBAG nick guarino.
i would like to help ye get ure money back by offering all information i have on the company which is quite extensive.
i am also available to r
testify against the company if any of u are involved in a lawsuit against nick.
not only that but i have hundreds of pages of documentation belonging to the company and 4 other ex employees are also willing to testify.
this selfish evil man must be stopped!!!
There's nothing wrong with being sensibly-contrarian at likely stopping points (when the market is overbought, sentiment is over-bullish, and things like the CCI are divergent) while still being a long-term bull.
I had toyed with the idea of shorting gold at $1100 (on the basis that it got there too quickly) but held off - but here is what I wrote on Nov 22 (on Facebook of all places - see http://www.facebook.com/home.php?#/profile.php?ref=name&id=1015193274 )...
Cheerio
GT
GT's Market Rant
In perfecting the art of selling low and buying high, Barrick and other gold mining hedgers destroyed billions of dollars of their shareholders’ capital.
Beautifully put. I despise Barrick and wouldn't touch their stock.
A most sober analysis. I'd like to discuss the idea of gold "pullbacks",where 10-20% retreats are commonly mentioned. If one accepts Hathaway's premise that the price of gold is no more than a "dark mirror" to the rot in world finance (which I do), then it seems to me that the accurate measure of the legitimacy of, say, a 10-20% gold correction" would imply a commensurate 10-20% "improvement" in the aforementioned rot. Lacking any convincing evidence to support such improvement, I think one must conclude that any gold pullback is simply a large pricing anomaly, and that it represents a (perhaps incresingly vanishing) opportunity to back up the truck...
Anon #157232 - I don't agree that you can infer anything about underlying conditions (e.g., the 'rot') from price swings on short timescales.
Quite apart from the embedded assumption of log-linearity between the PoG and the 'rot', there is scope for persistent divergence between underlying conditions and asset prices (I offer as Exhibit A, housing prices in Detroit and Sacramento prior to the CDO-led debacle of 2008).
The long-run attractor for the PoG in USD is, always, the USD cost of production of an ounce of gold. It is by no means clear to me that this ought to rise faster than the rate of depreciation of the USD relative to the prices in which gold production factors are remunerated (e.g., ZAR in SAfrica, AUD in Australia for labour); producers gross margin - the determinant of the payments to capital - has to be converted for shareholders outside of the domicile of production.
As with the swing high in equities (and swing low in USD, for the moment) the recent behaviour of the PoG was predictable: when any market reaches a price extreme - up or down - there are always nuffnuffs lining up for a "Dirty Sanchez": they will be on the long side of Gold at $1200 (as they were at Nasdaq 5000, and S&P 1400, and AUD at $0.98 and EURUSD at $1.60) and they were on the short side at PoG $900 (and SPX 670 and AUD $0.61 and EURUSD $1.1600 and DAX 4000).
If you arrange your affairs to be on what the majority thinks is the 'wrong' side, you can make quite a decent living as a trader: the important thing is to be patient enough to be able to ignore an apparent top (or bottom) when the conditions aren't absolutley perfect (that's why I called off a gold short at $1100 the day before gold got to $1100 - conditions were not right).
Cheerio
Cheerio
GT
GT's Market Rant
At the close today (120809) gold's price is touching the bottom of its channel. I think that's what is called a "dip".
Anon #157369 - I wouldn't be too sure: if USDX (which is ripe for a bounce) gets legs (say, a brief spurt to above 80) then SPX 950 and PoG $900 are quite easily achievable without doing the least bit of damage to the long-term uptrend in Gold and the secular death throes of the US shekel (both of which were part of my pre-911 "The US is finished, like Britain in 1925" hypothesis from May 2000).
Cheerio
GT
GT's Market Rant
I was short gold too early 1100...and it started to hurt when it went to 1200...Oddly, I changed my gold tune and after the recent dump in gold prices (and a chat with Pomboy), I cut my losses on the shorts and went long today. Good luck to me...
Oddly, I am still long the dollar and oil, short the SPX and ultrashort the 10yr.
I'm sorry, that dead horse appears to need more flogging. This fellow is smart and has been observing this game for years, so I find it odd and disconcerting that he so cavalierly discusses derivative gold in the context of an Austrian and hard money lens. The ETF was created the same year that the Rothschild's withdrew from the London gold market. The ETF has functioned as a siphon to divert demand away from the physical metal. There is no way for the ETF to function as safe haven at the moment it is needed as such. It is a trade that can be played with great success in the here and now, but that is all it is. There is no wealth insurance in GLD, and that is by design.
Very good paper. Its not easy to find gold article without conspiracy.. What i find preplexing among gold investors is love for all sort of conspiracy theory. Paper gold vs physical gold. ITS NONSENSE! i went to delivery with COMEX and LBMA. there are NO issues... futures are and will be most efficient way to trade gold, oil, grain or even stocks. Until financial system fully meltdowns there are no advantages of holding physical vs rolling futures. If market going to have one it will be arb out.
ever heard of naked shorts?
Thanks for sharing the article, it is quite an illuminating read. Gold is indeed a fascinating object, not just due to its beauty, but also its unique property of being both at once invaluable and worthless.
My personal favourite passage from the article, however, is this one:
"Uncertainty as to collateral values restricts credit despite available liquidity. The contraction of credit hurts economic activity, causing incomes to fall and asset values to fall further. A negative shift in expectations rapidly overtakes behavior. There is little government policy can do about this other than to devalue currency to lessen debt burdens. The Fed understands this and is acting accordingly." -Pg.7 Para.3
See, i've always maintained that people are being too harsh on poor old Bernanke.